Under Armour will pay $434 million to members of a class action lawsuit who bought the company’s stock between Sept. 16, 2015 and Nov. 1, 2019. The lawsuit, filed in 2017, alleged that Founder and then-CEO Kevin Plank knowingly or recklessly misrepresented facts regarding consumer demand for Under Armour’s products as well as the company’s financial and operating results, according to the Wall Street Journal.
Without admitting any fault or wrongdoing, the activewear retailer also agreed to keep the jobs of Chief Executive and Chair of the Board separate for three years from the date the settlement is finalized. Additionally, stock granted to Under Armour’s CEO, CFO and Chief Legal Officer will be subject to a performance-based vesting condition to be set by the Human Capital and Compensation Committee of the Board of Directors.
The U.S. District Court in Maryland must approve the deal before payments are made or the changes take effect. Under Armour will pay the settlement with cash on hand or draw on its $1.1 billion revolving credit facility.
Under Armour revealed in November 2019 that it had been the subject of a federal investigation into its accounting practices since 2017, with the Wall Street Journal reporting at the time that both the Justice Department and the Securities and Exchange Commission were looking at the retailer’s financial reporting.
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“We firmly believe that our sales practices, accounting practices, and disclosures were appropriate, and deny any wrongdoing in this case,” said Mehri Shadman, Chief Legal Officer and Corporate Secretary at Under Armour in a statement. “Today’s announcement allows us to move past this more than seven-year-old matter so we can avoid the ongoing distraction of litigation and provide certainty to the business at a time when we are executing on important strategic priorities.”
Founder Kevin Plank returned as Under Armour’s CEO in April 2024, and the retailer announced extensive restructuring plans in May 2024 after a disappointing 2024 fiscal year, which ended March 31, 2024.
